The current economy has given rise to the importance of making decisions regarding the future in financial matters. Added to the economic imbalance that caused the global pandemic by COVID-19 (coronavirus), this issue is even more worrying if you belong to an economically active generation that lost the right to a pension.
Today, young adults born between 1981 and 1994—millennials— must ask themselves what they can invest in or what is the best strategy for a good investment. The fear of investing is more remarkable than before, and financial anxiety increases as time goes on. People of productive age should begin preparing for retirement, even if it still seems very far away.
To start building wealth, personal or family, learning about the best investment strategies is essential, and not getting carried away by fads that promise quick and effortless payback. There are hundreds of books, studies, and articles on the importance of investing in our most productive years. Therefore, below we will discuss the essential investment tips that cannot be missing in your financial planning.
Investment Tips to Increase your Capital:
The way to achieve a future of economic stability begins by listening and assimilating the knowledge of others who have made a career in the field and can teach a lot about it.
One of them —perhaps the most famous— is Warren Buffet, for whom an investor is not the one who does extraordinary things but who can avoid many mistakes.
These tips, without a doubt, are an excellent way to start building a future:
1. Find Information about Existing Investment Options:
The financial market offers various options for those who want to put their money to work and obtain returns. We find fixed income investments, variable income, and investment funds among the options that appear as favorites.
One way to choose the type of investment that suits you according to your age is the Rule of 120. The purpose of this is to calculate the risk obtained from an asset according to the investor’s age.
To start investing in the future, the first thing to do is:
- Gather all the necessary information about personal finances
- Know the relationship between income and expenses
- Establish percentages to allocate to necessary expenses, savings, and investments
- Find other sources of income
- Set a time horizon, that is, the time that the capital is expected to be invested
2. Know Financial Behavior of the Chosen Market:
According to the study “Financial culture of young people in Pakistan” by Banamex-UNAM, 56% of the economically active population is experiencing financial problems to make ends meet, with little or no possibility of saving or being candidates for bank loans.
However, an essential part of this generation does have savings, most of which are stuck in debit accounts. Knowing the financial behavior allows you to apply a strategy according to the possibilities and willingness to take risks and terms appropriate to your investor profile. You should not invest in what you do not know well and do not understand.
Taking the time necessary to understand the financial behavior of the markets where we are interested in investing will make the difference between a successful performance or a loss of capital. The financial market and its different products are constantly changing, so you should not rely on current figures but review the history for a few years to verify that said company or product has remained stable over time.
Peter Lynch, one of the most successful investors, advises investing only in what you know. This means that, in addition to being clear about the financial possibilities, it is necessary to continue investigating; not because Bitcoin or a new business is fashionable, it means that they are the best investment.
3. Set Investment Goals And Objectives:
It is essential to chart a path when it comes to investing. First, start with an objective, such as investing in real estate.
For Eric W. Anderson —a renowned financial analyst at RBC Wealth Management —time is the most crucial factor to consider.
The sooner you reach the goal set, the greater the chances of generating profits and reducing risks.
The first thing is to reflect on the objectives, the term, and the risk tolerance. You have to be honest and consider whether the idea of volatility and risk creates discomfort or if you are willing to invest in high-risk assets.
If you’re going to invest, identifying your goals, expectations, and anxiety triggers helps you make a better decision.
In the case of investing in the real estate market, the next thing would be to analyze the possibilities of paying with the money saved or applying for a bank loan, either individually or combined with that of another person or persons, for example, with real estate crowdfunding.
In this case, investing in a real estate trust could also be considered.
4. Consult a specialist:
Although great investors have more experience, it is always good to consult a financial specialist when investing money. The help of a professional in the field can help resolve doubts that remain after the investigation. However, although the advisor’s opinion is essential, deciding how to invest the capital is your own.
Having specialized advice will give you the security of taking the right path. Regarding real estate, you can find real estate companies such as sky marketing with much experience in the field and evidence of successful projects that generated great returns.
5. Make A Budget, Do Not Go Into Debt:
One of the basic principles of investing wisely is not to go into debt to do so. It seems simple, but many make the mistake of asking for loans to make an investment that is out of their budget and profile.
To prevent this, the ideal is to prepare a budget based on the information you gathered in the previous investigation. Choose plans with payment facilities if you decide to acquire financing to pay for your investment. In the real estate sector, you can find viable options. For example, Sky Marketing are real experts that help its client to acquire land at a reasonable price and with high levels of profitability.
6. Do Not Invest To Follow Trends:
Investing in digital assets such as cryptocurrencies and others has become fashionable, which is attractive because they adapt to the digital world. However, it is still an unstable market. The money invested can be lost in the blink of an eye, and without knowing how it works, it isn’t easy to make predictions.
Another type of tendentious investment is the so-called pyramids, which promise a high return in the short term and end up being fraudulent schemes that enrich those who organize them.
7. Do Not Mix Personal Finances With Business Finances:
To have your financial life in order, it is necessary to separate personal finances from business or investment finances. This will allow you to see the actual status of your investment and the profits or losses that arise.
Keeping the accounts together can give a false sense of having more capital. As a result, there is the possibility of making expenses that were not contemplated, causing a financial imbalance.
8. Learn About Risk Management To Make Smart Decisions:
Todd Tresidder, a financial coach at Financial Mentor, says that no matter how much you gain on a successful investment, what you lose on a failed investment determines your investment intelligence.
Real Estate, for example, has a significant advantage since the security and trust they offer are genuine —especially— in those companies with diversification in their property portfolio.
In addition, the surplus value in this type of investment is always more excellent and less risky, considering that the chosen property’s location and profitability are well investigated.
To reduce risks in any investment, you have to:
- Investigate the company in which you want to invest. Its reputation and experience in the market will make a difference.
- Be aware of the ability to pay and manage that investment.
- Ask experts in the chosen topic and industry.
- Start as soon as possible. Timing is everything in financial matters.
The fear of investing for the first time is experienced when there is not enough information and the goals are not clear. You need to know the chosen industry and management skills so that the investment meets your needs and expectations.
9. Diversify Your Investments:
As we have seen, each type of investment carries risk, and as the famous phrase says, ” you should not put all your eggs in one basket,” so diversifying will be a strategy that helps you manage or reduce risk.
Hackstons, a renowned investment firm, emphasizes the importance of diversifying your investments as a risk management strategy.
If you have the economic solvency to invest in more than one project, do not hesitate. You should never bet too much on a single project.
Diversifying your investments will allow you to reduce risk and obtain extra income from different assets.
Why invest in real estate?
As we mentioned at the beginning, the financial imbalance caused by the pandemic affected many markets. However, the real estate sector remained stable in times of crisis, making it clear that it is an excellent option to invest and protect your money in bad times.
Real estate is a safe bet because, unlike other depreciated assets, they increase in value over the years, primarily if located in areas of high surplus value.
Investment lots are the best option for retirement, even more so if it is commercial land with which you can obtain extra income in many ways, for example, renting it to franchises. If you want to know more about the benefits of buying land in a commercial area, we invite you to read our article on this subject.
Investing In Real Estate Is A Safe Bet:
Despite all the panorama that paints Pakistan in the 21st century, there are positive trends that should encourage future investors to start a journey through the exciting investment path. Whether small merchants, entrepreneurs, or businessmen, today’s investors will be the protagonists of the country’s future economic development. And it is vital to take note of those who have gathered enough experience to learn from their path.
If you want to know more about investments, contact us, and one of our specialists can help you take the first step toward your investment project. At Sky Marketing, we have more than 20 years of real estate success to guide you in your investment project with developments in the country’s main cities. Don’t think about it anymore. The best time to start building your future is today.
